Background
SEBI vide notification dated June 10, 2009 notified the SEBI (Delisting of Equity
Shares) Regulations, 2009 ("Delisting Regulations"), thereby superseding the earlier SEBI (Delisting of Securities) Guidelines, 2003.
Since then, several amendments have been carried out in the Delisting
Regulations according to the changing needs and developments in the securities
market
To further
streamline and strengthen the delisting process / regulations, the SEBI has
issued the Securities and Exchange Board of India (Delisting of Equity Shares)
Regulation 2021 vide notification No. SEBI/LAD-NRO/GN/2021-25 dated 10th June,
2021, with the objectives of:
- Enhance disclosures to help investors to take informed investment decisions
- Refine process
- Rationalize the existing timelines, so as to complete the delisting in time bound manner.
- Streamline the delisting regulations to make it robust, efficient, transparent and investor’s friendly.
- Update references to the Companies Act, 2013 and other securities laws
Applicability
Delisting of
equity shares of a company including equity shares having superior voting
rights from all or any of the recognised stock exchanges where such shares are
listed except delisting of equity shares of those listed companies :-
- that have been listed and traded on the innovators growth platform of a recognised stock exchange without making a public issue;
- Where pursuant to a resolution plan approved under section 31 of the Insolvency Code, if such plan provides for:
- delisting of such shares; or
- an exit opportunity to the existing public shareholders at a specified price:
Conditions of
delisting
- unless 3years has elapsed since the listing of that class of equity shares on any recognised stock exchange;
- if any convertible instrument issued by the company is outstanding;
- pursuant to a buyback of equity shares by the company, unless a period of 6 months has elapsed from the date of completion of such buyback;
- pursuant to a preferential allotment made by the company unless a period of 6 months has elapsed from the date of such allotment:
2. No acquirer
shall propose delisting of equity shares of a company, if the acquirer had sold
the equity shares of the company during the period of six months prior to the
date of the initial public announcement made in terms of sub-regulation (1) of
regulation 8 of above specified regulations.
3. No acquirer
shall, directly or indirectly, employ the funds of the company to finance an
exit opportunity or an acquisition of shares made pursuant to sub-regulation
(4) of regulation 33 of above specified regulations.
4. No acquirer
shall, directly or indirectly,–
- employ any device, scheme or artifice to defraud any shareholder or other person; or
- engage in any transaction or practice that operates as a fraud or deceit upon any shareholder or other person; or
- engage in any act or practice that is fraudulent, deceptive or manipulative
- in connection with any delisting of equity shares sought or permitted or exit opportunity given or other acquisition of equity shares made under specified regulations.
Modes of
Delisting
Delisting from
the stock exchanges could either be undertaken voluntarily or compulsory
delisting by the stock exchange or delisting pursuant to liquidation.
Voluntary
Delisting can be done in two ways, firstly delisting from some of the
recognized stock exchange without providing an exit opportunity to the public
shareholders, if after the proposed delisting, the equity shares remain listed
on any recognised stock exchange that has nationwide trading terminals and
secondly, delisted from all the recognised stock exchanges having nationwide
trading terminals on which they are listed, after an exit opportunity has been
provided by the acquirer to all the public shareholders holding the equity
shares.
Given below the
brief procedure of Voluntary Delisting in case where no exit opportunity is
required:
Voluntary
Delisting |
|||
Procedure for
delisting where no exit opportunity is required |
|||
S.No. |
Steps |
Regulation |
Remarks |
1. |
Obtaining Board Approval
for considering the Delisting of the securities from relevant stock exchange. |
Regulation 6(1)(a) |
|
2. |
Make application to the
relevant stock exchange for Delisting of securities |
Regulation 6(1)(b) |
The application shall
submit with copy of Board resolution. |
3. |
Issue a public Notice of
the proposed delisting in one English and one Hindi national newspaper (with
wide circulation in their all India circulation) and in one vernacular
newspaper where the relevant stock exchange is location |
Regulation 6(1)(c) |
The public notice shall
mention the name of the recognized stock exchange where the securities are
intended to be delisted and reasons of delisting and fact of continuation of
listing of equity shares on the recognized stock exchange having nationwide
trading terminals. The fact of delisting
shall be disclosed in the annual report post delisting. |
4. |
An application shall be
disposed off by the stock exchange within 30 days from the date of receipt of
application. |
Regulation 6(3) |
Application shall be
complete in all respects |
This article has been Compiled by Swati Garg (Senior Associate), you can
direct your queries or comments to the author at swati@factumlegal.com
Disclaimer-
The contents of this article should not be construed as a legal opinion.
This article is intended to provide a general guide to the subject matter.
Specialist advice should be sought about your specific circumstances. We
expressly disclaim any financial or other responsibility arising due to any
action taken by any person on the basis of this article.
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